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Why Greenbrier Companies Shares Are Surging Today

By Timothy Green – Jul 10, 2020 at 12:27PM

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The railcar manufacturer's results weren't nearly as bad as expected.

What happened

Shares of The Greenbrier Companies (GBX 0.75%) soared on Friday after the railcar manufacturer reported fiscal third-quarter results that blew past analyst estimates. The company also updated investors on its liquidity situation and detailed its efforts to cut costs. The stock was up about 21.7% at 11:30 a.m. EDT.

So what

Greenbrier reported third-quarter revenue of $762.6 million, down 10.9% year over year but $156.1 million higher than the average analyst estimate. The manufacturing segment was the best performer, with revenue of $653 million, down just 4.2% from the prior-year period.

A rising chart

Image source: Getty Images.

Earnings per share came in at $0.83, up from $0.46 in the third quarter of last year and $0.78 ahead of analyst expectations. Greenbrier cut costs by closing 11 rail production lines and reducing its head count in North America by roughly 40%.

Greenbrier now has approximately $1 billion of liquidity available, which includes $735 million of cash. The company will continue to pay its quarterly dividend, with the next per-share payment of $0.27 payable on Aug. 19.

Now what

Greenbrier is in surprisingly good shape despite the pandemic. The company has a backlog of 26,700 new railcars worth $2.7 billion, which will leave it with minimal open production capacity for the rest of the calendar year.

Greenbrier operates in a cyclical industry, and the U.S. economy is facing extreme uncertainty. Things can change quickly for Greenbrier, but for now, investors are happy with the company's results.

Timothy Green owns shares of The Greenbrier Companies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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